The EUR/USD pair continues to consolidate this week, trading under pressure amid political instability in Germany and the expected increase in tariffs from the US.
Possible technical scenarios:
As we can see on the daily chart of EUR/USD, the pair is trading near the upper boundary of the symmetrical triangle. If the price turns down from the resistance at 1.0478, a pullback to the area near 1.0271 is possible. However, if the triangle breaks out upwards, this will open the way for the pair to reach the 1.0672 level.
Fundamental drivers of volatility:
Political instability in Germany is putting pressure on the EUR/USD pair. Investors are uncertain whether Friedrich Merz's coalition government will be able to stimulate economic growth, and this uncertainty in Europe is reducing the attractiveness of the euro.
Additional pressure comes from Donald Trump's statement about maintaining plans to introduce 25% tariffs on Canada and Mexico, which supports demand for the dollar. The US dollar index has stabilized after recent fluctuations, which also limits the growth potential of EUR/USD.
This week, upcoming macroeconomic data may also influence the pair’s dynamics. On Thursday, durable goods orders in the US are expected, and on Friday, the Consumer Spending Index (PCE) will be released, which could affect the Fed's policy.
Intraday technical picture:
Given the unfolding scenario on the 4H chart of EUR/USD, the pair needs to overcome the local dotted resistance at 1.0515 for further growth. If successful, the triangle pattern could drive the price toward at least the 1.0672 level.
The GBP/USD pair has entered a sideways trend after three weeks of growth following the Bank of England rate cut and in anticipation of further action from the regulator.
Possible technical scenarios:
On the daily chart, GBP/USD is trading in a narrow sideways range between 1.2608 and 1.2656. A breakout from this range could lead to a pullback to the 1.2500 level. However, if the pair breaks upwards, the next target for growth would be 1.2792.
Fundamental drivers of volatility:
The pound sterling remains in a sideways trend against the US dollar as investors assess the outlook for the Bank of England's monetary policy and the impact of the Trump administration's trade policies.
The recent 25 basis point rate cut by the Bank of England to 4.5% was seen by the market as the start of an easing cycle. However, some committee members, including Swati Dhingra, are advocating for more aggressive actions. She warns that gradual rate cuts could keep policy restrictive until the end of 2025, potentially worsening weakness in consumer demand.
This week, investors are focused on upcoming US PCE inflation data, which could affect on market expectations regarding the Fed’s next moves. Strong data could support the US dollar, while signs of slowing inflation could increase the likelihood of US monetary easing, benefiting the pound.
Intraday technical picture:
As evidenced by the 4H chart of GBP/USD, the pair continues to trade below the resistance of the ascending channel. If it fails to break above this level, the price could pull back to 1.2500 and potentially lower to the horizontal support area around 1.2430.
The Japanese yen has recovered slightly against the US dollar this week but remains weak amid falling Japanese government bond yields.
Possible technical scenarios:
The daily chart shows that USD/JPY reached the support level at 148.80, from which it retreated upwards to the resistance at 150.17. In the absence of strong volatility catalysts, the pair may continue trading within this range. However, if the 150.17 level is broken out, the recovery could extend to the next target at 151.71.
Fundamental drivers of volatility:
A key factor putting pressure on the Japanese yen is the decline in Japanese government bond yields following statements from Bank of Japan Governor Kazuo Ueda about potential increases in JGB purchases. This suggests the continuation of loose monetary policy, which weighs on the yen. However, persistently high inflation and the rise in the PPI support expectations of further rate hikes, limiting the yen's decline.
At the same time, the US dollar received support after its recent pullback from December lows. Uncertainty surrounding the Trump administration's economic policies and weak US macroeconomic indicators are forcing the Fed to act cautiously, which is preventing aggressive growth of the dollar. However, statements from Fed officials about the need for more clarity before cutting rates give the dollar a chance to maintain its current position.
Investors are closely watching the upcoming Conference Board consumer sentiment data, with the main focus on the PCE index release on Friday. This data could become a decisive factor for future expectations regarding the Fed’s rates and set the direction for the USD/JPY movement.
Intraday technical picture:
Judging by the look of things on the 4H chart of USD/JPY, the price has retreated from the upper boundary of the sideways range between 148.80 and 150.17. As a result, a return to support at 148.80 and a continuation of sideways dynamics for some time are plausible.
The USD/CAD pair fell slightly amid rising oil prices, which supported the Canadian dollar, along with some weakening of the US dollar due to expectations of a Fed rate cut.
Possible technical scenarios:
As we can observe on the daily chart, USD/CAD has reached resistance within the range between 1.4116 and 1.4261. From here, the price may either turn down and move back to support or, if it consolidates above 1.4261, it could continue to rise toward the target of 1.4349.
Fundamental drivers of volatility:
US data has fueled speculation about further easing of monetary policy, limiting the growth potential of the US dollar. Meanwhile, accelerating inflation in Canada reduces the likelihood of an imminent rate cut by the Bank of Canada, which supports the Canadian dollar
The US dollar is also facing additional pressure from uncertainty surrounding trade tariffs from the Trump administration, which could impact the US economy and weaken the dollar. However, traders are awaiting upcoming economic data, such as the Conference Board Consumer Sentiment Index, which may adjust expectations for Fed rates and influence the direction of the pair.
A key factor for USD/CAD dynamics is the situation in the oil market, as rising commodity prices continue to support the Canadian dollar.
Intraday technical picture:
On the 4H chart of USD/CAD, the sideways trend has formed under the resistance of the range between 1.4116 and 1.4261. In this context, a downward price reversal and trading within a wider sideways range are possible if US data weakens the American currency.
Gold has fallen amid general market instability but maintains long-term support due to prospects for Fed monetary easing. On Tuesday, prices retreated from the all-time high reached on Monday.
Possible technical scenarios:
On the daily chart, XAU/USD is testing the resistance level at 2948.01. A consolidation above this level could lead to further growth in the price of the precious metal toward $3,000.00 per ounce. Alternatively, a price pullback to the support at 2873.28 marked with a dotted line is also possible.
Fundamental drivers of volatility:
The main factor putting pressure on gold is negative market sentiment, triggered by the Trump administration's plans to tighten restrictions on semiconductor supplies to China. This led to a flight of investors into bonds, reducing their yields, and stock markets entering the red zone.
Additional pressure comes from growing expectations of a Fed rate cut. The probability of a 25 basis point cut in June has reached 50%, driven by a decline in US bond yields. Investors are waiting for Friday’s release of the Consumer Spending Index (PCE), a key inflation indicator, which may influence the Fed’s future policy.
Intraday technical picture:
As seen on the 4H chart of XAU/USD, consolidation in a narrow range below 2948.01 may continue until significant volatility catalysts emerge. Technically, the further price direction will depend on whether gold can successfully consolidate above 2948.01.
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